Securities Law & Instruments

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- securities exchange take-over bid circular requires prospectus level disclosure -- relief requested from the requirement to provide three year audited statements of certain acquired assets that constitute a significant acquisition. The relief requested is consistent with the requirements CSA Staff Notice 42-303 Prospectus Requirements and National Instrument 51-102 Continuous Disclosure Obligations -- exemption granted.

Rule/Instrument/Notice Cited

OSC Rule 41-501 General Prospectus Requirements.

National Instrument 51-102 Continuous Disclosure Obligations.

CSA Staff Notice 42-303 Prospectus Requirements.

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA, BRITISH COLUMBIA AND ONTARIO

(THE JURISDICTIONS)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

GREAT PLAINS EXPLORATION INC. (THE FILER)

 

MRRS DECISION DOCUMENT

Background

1. The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that the Filer be exempt from certain financial disclosure obligations in connection with a take-over bid for all of the outstanding securities of Energy Explorer Inc. (EnEx).

2. Under the Mutual Reliance Review System for Exemptive Relief Applications (MRRS)

2.1 the Alberta Securities Commission is the principal regulator for this application; and

2.2 this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

3. Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are otherwise defined in this decision.

Representations

4. This Decision is based on the following facts represented by the Filer:

4.1 The Filer was incorporated under the Canada Business Corporations Act on March 4, 2004.

4.2 The head office of the Filer is located in Calgary, Alberta.

4.3 The authorized share capital of the Filer consists of an unlimited number of common shares of which 16,292,686 common shares (the Filer's Shares) are issued and outstanding as at the date hereof.

4.4 The Filer is a reporting issuer or the equivalent in each of the jurisdictions of Canada and is not in default of any requirements under the securities legislation of such jurisdictions.

4.5 The Filer's Shares are listed on the Toronto Stock Exchange under the trading symbol "GPX".

4.6 EnEx was incorporated under the Business Corporations Act (Alberta) on November 29, 2000.

4.7 The head office of EnEx is located in Calgary, Alberta.

4.8 The authorized share capital of EnEx consists of an unlimited number of common shares, of which 21,511,065 common shares (the EnEx Shares) are issued and outstanding as at the date hereof.

4.9 EnEx is a reporting issuer in Alberta and is not in default of any requirements under the securities legislation of Alberta.

4.10 The EnEx Shares are not listed or posted for trading on any marketplace or exchange.

4.11 The Filer and EnEx entered into a Pre-Acquisition Agreement dated as of July 7, 2004 (the Agreement). Pursuant to the Agreement, the Filer proposed to make an offer to purchase all of the EnEx Shares at a price per share of: (i) $0.67 cash; or (ii) 0.6155 of a Filer's Share; or (iii) a combination thereof (the Take-over Bid). The cash portion of the Take-over Bid is limited to a maximum amount of $4,850,000.

4.12 The Take-over Bid will be conducted as a formal take-over bid under the Legislation.

4.13 Effective June 11, 2004, the Filer completed the acquisition of certain, but not all, of the Canadian-based oil and gas assets (the Assets) of Eurogas Corporation (Eurogas) pursuant to a plan of arrangement (the Plan of Arrangement).

4.14 The acquisition of the Assets by the Filer constitutes a "significant acquisition" under the Legislation (the Significant Acquisition).

4.15 The Filer has prepared a take-over bid circular (the Circular) in connection with the Take-over Bid and as a result of the Significant Acquisition, the Legislation requires that the Filer include in the Circular audited financial statements for the Assets for the last three completed fiscal years (the Financial Statement Requirement), but the Filer is unable to comply with the Financial Statement Requirement.

4.16 Although there are audited financial statements for the year ended December 31, 2001 for all of the Canadian-based oil and gas assets owned by Eurogas (the Eurogas 2001 Statements), the Filer is unable to prepare and include audited financial statements solely for the Assets for the year ended December 31, 2001 based on the information in the Eurogas 2001 Statements (the 2001 Asset Statements) because

4.16.1 Eurogas changed its auditor from Deloitte & Touche LLP (Deloitte) to Ernst & Young LLP (E&Y) in 2002 and, as a result, Deloitte audited Eurogas' 2001 financial statements and E&Y audited Eurogas' 2002 and 2003 financial statements;

4.16.2 Eurogas no longer has accounting personnel familiar with, or who assisted in the preparation of Eurogas' 2001 financial statements; and

4.16.3 as a result of the Plan of Arrangement, the Filer has a newly formed management team with no history in respect of its 2001 financial information.

4.17 The inability of the Filer to prepare the 2001 Asset Statements is outside of its control.

4.18 In lieu of the financial statements for the Assets for the last three completed fiscal years, the Filer proposes to include in the Circular audited financial statements of the Great Plains Exploration Division, a segment of Eurogas, as at December 31, 2003 and 2002 and for the years then ended and selected financial information, including operating revenues, operating and royalty expenses for the Assets for the period 2003 to 2001 and information with respect to reserves estimates and estimates of future net revenues and production volumes for the Assets (the Alternative Disclosure).

Decision

5. Each of the Decision Makers is satisfied that the test contained in the Legislation that provides the Decision Maker with the jurisdiction to make the Decision has been met.

6. The Decision of the Decision Makers under the Legislation is that Great Plains shall be exempt from the requirement under the Legislation to include in the Circular audited financial statements for the Assets for the last three completed fiscal years provided that the Circular includes the Alternative Disclosure.

August 30, 2004.

"Glenda A. Campbell"
"Stephen R. Murison"